Are You Ready For Home Ownership?
By Gail Harlow
“The scariest moment was at closing, when I was signing the papers with all the zeros after the numbers,” says Bette Kaminsky, recalling the day she took possession of her nifty seaside cottage in Ocean City, NJ. “I couldn’t believe I was agreeing to pay that much money for one thing.” Crunch the numbers. After you’ve added up all of the costs (count ‘em: closing fees, moving expenses, property maintenance, insurance, new furniture, possible renovation, etc.) and calculated the mortgage-interest and property-tax deductions you’ll gain, does it make sense financially in the short term? What if your career requires you to relocate in a year? Will housing prices increase enough in that time for you to recoup these expenses when you sell? Ginnie Mae has a rent or own calculator that will help you weigh the pros and cons.
That’s the $232,200 question (and the median price of homes today). Because the median income of single women is 20% less than it is for single men, single women often find it harder to come up with a down payment. Kaminsky borrowed money from her aunt for hers. “She co-signed with me. After a year, I refinanced and put everything in my name,” she explains.
Even if you have enough money saved, think long and hard about what your future financial needs will be. “I always caution people against sinking too much into an illiquid asset like a house, if it means they won’t be able to afford to invest in other assets that might possibly appreciate more over time and that are more easily tapped into than housing is,” advises Eve Kaplan, a certified financial planner and founder of KaplanFinancialAdvisors.com. Ask yourself: “If I needed money fast, and all my savings were tied up in my house, where would I get it?” You don’t want to end up “house poor.”
There’s only one way to find out: Consult a mortgage broker, and go through the process of getting “pre-qualified,” in which banks check your credit score and financial history and estimate how much money they’d be wiling to lend you and at what cost.
Yikes! No more landlords to call in case of an emergency! If you aren’t Ms. Fix It, will you be able to afford to hire a professional when the pipes—or the roof—spring a leak?
